CRY HAVOC

...and loose the dogs of default.  Well there you go.  The Greeks activated the CAC's and sure enough, the ISDA voted unanimously to declare that an event of default had occured making way for pay outs under the CDSs that are outstanding.  So much for the oft-stated truism that "no EU member will ever be allowed to default."  Sort of reminds me of a well-known economist (unnamed) who used to work at Bear Sterns who back in '95 proclaimed, "Mexico will not devalue, PUNTO!"  For weeks thereafter every time he left his office on Park Avenue he would be greeted by cries of, "Hola! Punto!"  Great fun...for those who were short the Peso.

I'm sure the Euros will start the talk of an "orderly default" as though this was something different.  Seems to me that when a bunch of investors lose 100 billion Euros that they were owed and are forced into a resructuring agreement with no upside or claw-back that has absolutely no chance in succeeding in it's stated purpose, that's about as defaulty as a default can be.  But wait for it, it's coming to a theater nearest you on Monday if not sooner.  As for the CDSs, what can we expect there?

The concensus seems to be that the institutions involved in the pay-out are well-collateralized so there should be no problem, but 3+ billion Euros is a lot of scratch and late this afternoon there were reports of some 18-letter, totally unpronounceable Austrian Institution was making noises that they had real problems with making payments.  I  doubt there are going to be problems but we are very much on unfamiliar turf here and until the checks cash we simply don't know.  Another interesting twist to this scenario is going to be the discovery of who constitutes the payees; will it be so called strategic investors, i.e. institutions that make a living out of sovereign debt or hot money guys like hedge funds?  Heard from an old buddy of mine in the 'Oil bidness" who tells me the boys in the donut shop in Galveston are talkin' about one of their kind who bought up a whole bunch of CDSs and is planning on "makin' a killin' offa them Greeks!" There ARE opportunities for some real good tales coming out of this dog's breakfast and one can just hope they become public right away.  GREAT copy!

And for the future?  One has to sit back and wonder how the hell we got to this point over an economy that represents less than 2% of that of the Euro Zone and what will be it's effect in the years to come.  The answer to how did it happen is easy:  numbing stupidity on the part of arrogant and egotistic politicians.  What it will bring?  Ah, that is a more complex question and one which we will try to explore next week.  No point in confusing things.  In the fly-over zone it is March Madness and Bracket Sunday this weekend.  Nothing is more important.

Have a great weekend.